LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
The insurer's obligations under the contract include:
- AGuaranteeing investment returns on every product, since the insurer bears all of the risk under the contract once it is issued
- BProviding tax advice to the owner on how the proceeds and cash values will be treated
- Paying promised benefits, honouring statutory provisions, acting in good faith, and providing disclosures
- DOnly paying claims, since everything else in the contract is a matter for the owner and the agent
Correct answer: C) Paying promised benefits, honouring statutory provisions, acting in good faith, and providing disclosures
The insurer's duties extend beyond payment to fair dealing throughout the contract's life.
Why the other options are wrong
- AOnly where the contract guarantees them.
- BTax advice is not a contractual duty.
- DThe insurer's duties extend well beyond paying claims.
Exam tip
Insurer: pay, honour provisions, good faith, disclose.
Common mistake
Assuming the insurer owes nothing until a claim.
What this tests
CISRO competency component 1.2 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.